Gold Chart Could Spell Out 15% Drop: Pro

Expect gold to bounce when it retests April's low for the first time. But after that, there could be more trouble.

Gold opened up much lower on Sunday night, as metals took a beating once again. Silver was down as much as 8 percent, dipping to $20.25. Gold tested our next major support level, putting in a low at $1,336.30.

Since the open, things have stabilized. Gold has reached back above $1,350, testing the electronic close from Friday, although still down more than $10 from the marked floor close. Silver has erased much of its losses, but is still down sharply on the day.

Much of this choppiness can be attributed to currencies, as the dollar index hit a high of 84.40. As we have said many times before, a stronger dollar will put pressure on commodities priced in dollars. Aside from currencies, though, gold's weakness has been no secret. Especially when the Consumer Confidence reading came in a six-year high late on Friday, there was additional selling into the close.

Look for the prior $1,335.60 low to act as a major support now, but note a retest will likely send this market lower, with less emphasis on the $1,321.50 April low. The next major downside level is $1,283.50, but as we have previously mentioned, a close below that could potentially send this market down to $1,154.

Rich Ilczyszyn is Founder and CEO of iiTrader. Follow him on Twitter: @iiTrader

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